The problem:
We have large product images we want thumbnails of at various size but don't want to be stuck batch processing the images in Photoshop. We want a dynamic way or resizing images, that wont add an extra load time while the images is processing on the backend.

Amazon does this some how with their ecommerce solution. When you upload an image it resizes the image in square format and then gives you every size imagineable. ex 150x150, 149x149, etc. Starting at the largest size of the image, so if you upload a 1024x900 image it will resize it to 1023x899, 1023x1203 (add in white space where needed), then resize every pixel until it gets to 1x1px. The some how stores all the images to the server (if it even does that)

Uh, are you "sure" amazon does that? I sort of doubt that... generally a few different discreet sizes are stored (but not at 1px steps!) say a "thumbnail", "small", and "normal". Depending upon image format these can be stored in different images or embedded into the same image. Additionally, some image formats are designed so that a "preview" can be obtained simply by reading less of the data overall (that is, they can be sampled).
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user166390Nov 22 '11 at 23:21

2-3 years ago, when I worked on the amazon ecommerce solution, I could plug in any size smaller then the original and it would resize it proportionately. They could have ran a script every time I called the image possibly but either way, it help tremendously.
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TomFeb 6 '12 at 23:28